Overall it looks flat for the half-year (i.e., my balance increase is about the amount I've contributed during that time). I'm currently 50% US stocks, 20% International stocks, 5% US REITS, 25% Bonds/stable value. My lone individual stock holding is Berkshire Hathaway, which was a drag on the portfolio during this short term: the rest of the portfolio is up roughly 2%.

I only transfered to Vanguard recently, and my portfolio is not even fully invested yet. Currently 85% Stocks, 65/35 US/Int (that 35 is on vanguard advice which was between 30-40 and I am not really thrilled with it. I figure long term it will work out but would rather be in US, I hate advisors. I struggled with investing there I wanted to go with 50/50 VMVFX and VTIAX, but took the advice and went all VTIAX, not thrilled in the short term.) I only have about 6% in bonds right now, I am going with the advised 70/30 US/Int split, but all I have purchased from Vanguard is the VTABX fund so far. I also have MWTRX fund but not a lot in it. I know the fees are high but it has done well for me. I also have a few stocks and another ETF, the stocks have done really well for me and are long term investments so I am not selling them any time soon. But my core is not Total Us, Total Int, and I have VSEQX and VSMAX which make up a 10% Small/Mid tilt. Have money sitting on the side right now that will be invested in a future bond fund, and to increase holdings in current investments. I have been thinking about picking up FMIJX and making it 10% of my international stock funds, maybe 20. Have no clue what US bond fund to pick up probably Total US but not sure, maybe VBILX. Also lookinng at VUVLX as I am a bit light on Value, and VQNPQ which I just happen to like. Also have Wellington in a Roth. But in my short couple of months with Vanguard my only winner is has been MWTRX which is still just positive over that time and my stocks. Hasn't been bad but I am down about .5 percent, worst performer by far is VTIAX, while VSMAX is also down of my stock funds it is down the least. I hate the fact that Vanguard seems to have looked at Greece as a short term problem when they are all about long term and the problems in Greece go back some 200 years and pop on a regualr basis. OMG Greece is poor, has massive debt, civil unrest and political drama, when did this start? About 200 years ago. Still the only country I can think of that got invadid during WW2 and then there rebels who fought back, decided to have there own civil war while fighting the Nazi's. Who does that? It was like Bugs Daffy and Elmer having an argument, Duck Season, Rabbit season. But the Greek problem should resolve itself. Yeah right, thanks Vanguard.

I track my performance via PersonalCcapital.com (for free). I'm up 4.92% vs the SP500 which is up 0.87%. Since 9/25/14 (which is when I signed up for the PersonalCapital account and started tracking it), I'm up 12.08% vs the SP500 which is up 3.93%. Hoping, long term, to outperform by 100 bps annually or thereabouts.

77% intermediate term bond
23% equity (includes about 3% international and a flyer on LLNW that has done well)

Overall, I have a very low standard deviation. Too bad there's no easy way to measure SD in a YTD analysis, since a YTD number is sort of half the story. The other half of the story has to do with how much volatility one endured to get that return.

Calculated using spreadsheet and XIRR function accounting for exact date of each contribution.

What does it say about XIRR? It says use 12/31, or calculate your YTD return at the halfway point by using 6/30 and then adjusting with the method I showed.

My YTD is 3.88-4.00%, depending on precisely which date I use (I am using 1/5/15 because that's the date for which I have a year end 2014 total). So I think that's right. I have 10% VSS and 28% Total International so that probably helped.

XIRR calculates an internal rate of return. Other names for it are money-weighted return and investor return. This rate of return is not comparable to the return of an index.*

* It usually doesn't make much sense to look at the internal rate of return during sub-periods (like YTD), as it is uncomparable. It is best to look at this investor return over the entire investment history, to see how the investor has been doing overall.

What one usually wants to calculate, for YTD, is a portfolio return. Other names for it are time-weighted return and comparable return. This rate of return is comparable to the YTD return of an index.

Investor and portfolio returns can significantly differ (depending on the specific timing of contributions and withdrawals). So, the distinction between them cannot be dismissed as unimportant.

In a thread like this one, I would think that it would be more appropriate to report YTD portfolio return (time-weighted return).

longinvest wrote:XIRR calculates an internal rate of return. Other names for it are money-weighted return and investor return. This rate of return is not comparable to the return of an index.*

* It usually doesn't make much sense to look at the internal rate of return during sub-periods (like YTD), as it is uncomparable. It is best to look at this investor return over the entire investment history, to see how the investor has been doing overall.

What one usually wants to calculate, for YTD, is a portfolio return. Other names for it are time-weighted return and comparable return. This rate of return is comparable to the YTD return of an index.

Investor and portfolio returns can significantly differ (depending on the specific timing of contributions and withdrawals). So, the distinction between them cannot be dismissed as unimportant.

In a thread like this one, I would think that it would be more appropriate to report YTD portfolio return (time-weighted return).

I'm confused by this post. One can use XIRR to calculate a weighted return, YTD, on one's portfolio. One can certainly get an internal rate of return (XIRR) on a portfolio. I guess I'm just confused by the point you are making about comparing to the return on an index. I must be missing something.

What does it say about XIRR? It says use 12/31, or calculate your YTD return at the halfway point by using 6/30 and then adjusting with the method I showed.

My YTD is 3.88-4.00%, depending on precisely which date I use (I am using 1/5/15 because that's the date for which I have a year end 2014 total). So I think that's right. I have 10% VSS and 28% Total International so that probably helped.

You are entertaining me and I like it.

I own lots of VSS (more than 10% of my total portfolio). I even bought more after the dip in the beginning of January. I even bought VTI (total US stock market index) on January 7th after it had dropped 2.5% from the beginning of the year. And I don't have a YTD (6/30) performance that you have.

By starting on 1/5/15, you have removed the 1% drop in the markets in the first few days of the year. This automatically makes your portfolio performance 1% better than others who reported portfolio performance starting on 1/1/2015.

So from my perspective, it did look like the performance of my portfolio sucked despite having index funds, despite having asset classes that have outperformed total US stock market index, despite having total US stock market index bought 2.5% below its value at the start of the year, despite buying assest classes below the values they had on January 1st, despite having TIAA traditional vintages paying almost 5%, despite having TIAA Real Estate Account returning more than 4% so far this year, despite outperforming LifeStrategy Moderate Growth, and despite some other factors.

In any event, you have helped confirm something else I wrote previously on this thread. Thanks!

PS: If I use 1/5/2015 to 06/30/2015, then I get 5.33%. If I use 1/5/2015 to 7/04/2015, then I get 5.82%. Those are a far cry from a 60/40 benchmark of VSMGX and 1.65%.

DR wrote:I'm confused by this post. One can use XIRR to calculate a weighted return, YTD, on one's portfolio. One can certainly get an internal rate of return (XIRR) on a portfolio. I guess I'm just confused by the point you are making about comparing to the return on an index. I must be missing something.

Here's an extreme example just to illustrate the difference between XIRR and portfolio returns, and comparing them to an index.

I invest $1,000 in security A.

One year later, security A loses half of its value. Portfolio value: $500.

At that point, I invest an additional $1,000 in security A . Portfolio value: $1,500.

One year later, Security A recovers its initial value. Portfolio value: $3,000.

XIRR answers the question: Had I put my contributions into a savings account (on the same dates), instead of into security A, what annual interest rate would have been needed so that I end up with $3,000 at the end of the second year? The answer is: a bit more than 30%. So, XIRR will report this number*.

* To check this: After one year, $1,000 grows (at 30%) to $1,300. After contribution, that's $2,300. After another year, this grows (at 30%) to $2,990 (almost $3,000).

Yet, you and me know very well that the return of A, over 2 years, was 0%; it lost half of its value in the first year and recovered it in the second. Had I lump invested $2,000 in A and let it ride for 2 years, the final value would have been $2,000.

So, which of 30% or 0% is the valid return? It depends what you want to talk about!

If you want to compare A to the S&P 500, you'll say that the return was an annualized 0% over the 2-year period. If you want to describe the growth of the investor's money, it was an annualized 30% growth, but you have to understand that this impressive growth was simply due to the timing luck of the contributions.

Another investor investing his money in A over the exact same period, but making different contributions on different dates would have most probably got a completely different investor return (XIRR). But, he would have got the exact same portfolio return. As both investors had identical portfolios, it makes sense for their comparable returns to be identical. That's what the portfolio return gives you.

By starting on 1/5/15, you have removed the 1% drop in the markets in the first few days of the year. This automatically makes your portfolio performance 1% better than others who reported portfolio performance starting on 1/1/2015.

Excellent point. I shall have to cut short by one week my next 10th anniversary cruise in order to accurately calculate my YTD returns for your approval.

letsgobobby wrote:Excellent point. I shall have to cut short by one week my next 10th anniversary cruise in order to accurately calculate my YTD returns for your approval.

I think that's only true if you shred your year-end statements or delete them from your online accounts without reading them.

I'm impressed enough with myself for having kept track of 58 different contributions to retirement over the last 26 weeks. The only purpose of that record-keeping is to calculate meaningless numbers, like my YTD return using the XIRR function in my Excel spreadsheet, which is copied and pasted from my Google Docs quarterly, or whenever I get back from a cruise. You're asking a lot of me if you expect me to manually add up the year end totals of a dozen different accounts, twice, in order to replace my spreadsheet calculations. Isn't the spreadsheet supposed to make my life easier?

DR wrote:I'm confused by this post. One can use XIRR to calculate a weighted return, YTD, on one's portfolio. One can certainly get an internal rate of return (XIRR) on a portfolio. I guess I'm just confused by the point you are making about comparing to the return on an index. I must be missing something.

Here's an extreme example just to illustrate the difference between XIRR and portfolio returns, and comparing them to an index.

I invest $1,000 in security A.

One year later, security A loses half of its value. Portfolio value: $500.

At that point, I invest an additional $1,000 in security A . Portfolio value: $1,500.

One year later, Security A recovers its initial value. Portfolio value: $3,000.

XIRR answers the question: Had I put my contributions into a savings account (on the same dates), instead of into security A, what annual interest rate would have been needed so that I end up with $3,000 at the end of the second year? The answer is: a bit more than 30%. So, XIRR will report this number*.

* To check this: After one year, $1,000 grows (at 30%) to $1,300. After contribution, that's $2,300. After another year, this grows (at 30%) to $2,990 (almost $3,000).

Yet, you and me know very well that the return of A, over 2 years, was 0%; it lost half of its value in the first year and recovered it in the second. Had I lump invested $2,000 in A and let it ride for 2 years, the final value would have been $2,000.

So, which of 30% or 0% is the valid return? It depends what you want to talk about!

If you want to compare A to the S&P 500, you'll say that the return was an annualized 0% over the 2-year period. If you want to describe the growth of the investor's money, it was an annualized 30% growth, but you have to understand that this impressive growth was simply due to the timing luck of the contributions.

Another investor investing his money in A over the exact same period, but making different contributions on different dates would have most probably got a completely different investor return (XIRR). But, he would have got the exact same portfolio return. As both investors had identical portfolios, it makes sense for their comparable returns to be identical. That's what the portfolio return gives you.

It seems that you are just explaining what an internal rate of return means. I get that. You can use the XIRR function to figure both YTD or the annualized return depending on how you build the formula in Excel (i.e., whether your use 365 days or the number of days YTD). You can also use XIRR function to give an annualized return over several years. If you have a portfolio of 10 different positions, you can also use XIRR to figure out the YTD or annualized return (either one) on that entire portfolio. It sounds like you may be using the term portfolio in a different way than I was.

This is another possible case of weird math. The first fund has returned about 1.23% and the second fund has returned about -0.2% for the 6 months of the year. How one could get 5+% out of those two funds is only possible with phenomenal market timing.

OK, contributions could have made one's portfolio 5% larger, but that is not return on investment.

Last edited by livesoft on Sat Jul 04, 2015 3:35 pm, edited 1 time in total.

Suppose one bought 1000 shares of a fund on December 31, 2014 that closed at $24.08 a share. And then one made no other purchases through 6/30/2015 from the outside, but one did reinvest the dividend of $241 (0.241 per share) on 6/26 at $24.52 a share, and the fund closed at $24.24 a share on 6/30/2015.

What would one's YTD return to 6/30/2015 be?

Initial value is $24,080 (1000 * 24.08), number of shares purchased with reinvested dividend is 9.83 (241/24.52), ending number of shares is 1,009.83, and ending value is $24,478.25.

Interestingly, if one does not reinvest the dividend, using calculation method 2 but including the dividend as a positive cash flow on 6/26/2015, and using the final value of $24,240 (1000 * 24.24) on 12/31/2015, you get a value of 1.674%. I believe it's higher because the mid-year dividend cash flow has a larger present value than if included in the terminal value on 12/31/2015.

You can get a very close result with not reinvesting dividend by using calculation method 3, but multiplying the daily rate by 181 instead of raising the daily rate to the power of 181. This gives a value of 1.652%.

DR wrote:It seems that you are just explaining what an internal rate of return means. I get that. You can use the XIRR function to figure both YTD or the annualized return depending on how you build the formula in Excel (i.e., whether your use 365 days or the number of days YTD). You can also use XIRR function to give an annualized return over several years. If you have a portfolio of 10 different positions, you can also use XIRR to figure out the YTD or annualized return (either one) on that entire portfolio. It sounds like you may be using the term portfolio in a different way than I was.

In my vocabulary:

XIRR = investor return = money-weighted return

comparable return = portfolio return = time-weighted return

Is that clearer?

I use the same idea as in studies comparing "investor returns" to "fund returns".

Do you have more intuitive names to suggest?

Last edited by longinvest on Sat Jul 04, 2015 4:36 pm, edited 3 times in total.

Kevin M wrote:Interestingly, if one does not reinvest the dividend, using calculation method 2 but including the dividend as a positive cash flow on 6/26/2015, and using the final value of $24,240 (1000 * 24.24) on 12/31/2015, you get a value of 1.674%. I believe it's higher because the mid-year dividend cash flow has a larger present value than if included in the terminal value on 12/31/2015.

The shares purchased with the dividend lost money because they were purchased at a higher price than the closing NAV on 6/30/2015. If an investment loses money, then the return is lower. I can understand losing money, but I don't know what "larger present value" means in this case.

Kevin M wrote:Interestingly, if one does not reinvest the dividend, using calculation method 2 but including the dividend as a positive cash flow on 6/26/2015, and using the final value of $24,240 (1000 * 24.24) on 12/31/2015, you get a value of 1.674%. I believe it's higher because the mid-year dividend cash flow has a larger present value than if included in the terminal value on 12/31/2015.

The shares purchased with the dividend lost money because they were purchased at a higher price than the closing NAV on 6/30/2015.

Good point.

livesoft wrote:If an investment loses money, then the return is lower. I can understand losing money, but I don't know what "larger present value" means in this case.

In IRR calculations, each cash flow is discounted at the IRR. A cash flow received earlier has a higher discounted value than the same cash flow received later (time value of money).

So, if I change the date of the dividend from 6/26/2015 to 12/31/2015, the IRR drops from 1.674% to 1.665%. This shows that both the discounting and the "losing money" aspect contribute to the difference.

The point is that changing the date of a cash flow changes the IRR, so one must be careful about just changing dates in an IRR calculation. In your simplified scenario, there are only two cash flows (since reinvesting a dividend results in a net cash flow of $0 on the dividend date), one at the beginning and one at the end of the holding period, so just changing the end date provides a result that is consistent with other reasonable calculation methods.

DR wrote:It seems that you are just explaining what an internal rate of return means. I get that. You can use the XIRR function to figure both YTD or the annualized return depending on how you build the formula in Excel (i.e., whether your use 365 days or the number of days YTD). You can also use XIRR function to give an annualized return over several years. If you have a portfolio of 10 different positions, you can also use XIRR to figure out the YTD or annualized return (either one) on that entire portfolio. It sounds like you may be using the term portfolio in a different way than I was.

In my vocabulary:

XIRR = investor return = money-weighted return

comparable return = portfolio return = time-weighted return

Is that clearer?

I use the same idea as in studies comparing "investor returns" to "fund returns".

Do you have more intuitive names to suggest?

In other words, with the returns I posted earlier (3.67% investor return; 1.84% portfolio return), the investor return projects what my return for the year would be if not a single, solitary thing changed over the next six months. Which seems pretty dang unlikely.

I will think of portfolio return as "where I actually am so far" and investor return (XIRR) as "who knows, at the rate I'm going, maybe I'll be here after twelve months."

The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

This is another possible case of weird math. The first fund has returned about 1.23% and the second fund has returned about -0.2% for the 6 months of the year. How one could get 5+% out of those two funds is only possible with phenomenal market timing.

OK, contributions could have made one's portfolio 5% larger, but that is not return on investment.

Guilty as charged (phenomenal market timing). What can I say I got lucky. Pure luck and I know it won't happen again. Slow and steady at 60/40.

bayview wrote:In other words, with the returns I posted earlier (3.67% investor return; 1.84% portfolio return), the investor return projects what my return for the year would be if not a single, solitary thing changed over the next six months. Which seems pretty dang unlikely.

I will think of portfolio return as "where I actually am so far" and investor return (XIRR) as "who knows, at the rate I'm going, maybe I'll be here after twelve months."

The wiki's spreadsheet investor return (XIRR) was never meant to be used for predicting anything about the future; it was designed to give the overall investor return over the complete investment history (which, for most users, is longer than 11 months).

For laziness reasons, the spreadsheet currently computes an annualized investor return, regardless of history length, even when history length is 11 months or less. Usually, for periods of less than one year, it should report cumulative returns (not annualized); this would have required putting conditions in the spreadsheet formulas, and I didn't get do it yet.

This is another possible case of weird math. The first fund has returned about 1.23% and the second fund has returned about -0.2% for the 6 months of the year. How one could get 5+% out of those two funds is only possible with phenomenal market timing.

OK, contributions could have made one's portfolio 5% larger, but that is not return on investment.

Guilty as charged (phenomenal market timing). What can I say I got lucky. Pure luck and I know it won't happen again. Slow and steady at 60/40.

Nothing wrong with luck, its real money too. Just retired in July, 2008. I got extremely lucky when in the process of rolling over about $100,000 403(b) from a diversified portfolio in TIAA-Cref to Vanguard, I first put it in a MM account IN EARLY SEPTEMBER 2008! Well, I kept it in the MM account till the following spring, 2009 when I reinvested it in Vanguard after the March bottom. All pure luck. I probably kept from losing about $25,000 on that move.

Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

longinvest wrote:The wiki's spreadsheet investor return (XIRR) was never meant to be used for predicting anything about the future; it was designed to give the overall investor return over the complete investment history (which, for most users, is longer than 11 months).

For laziness reasons, the spreadsheet currently computes an annualized investor return, regardless of history length, even when history length is 11 months or less. Usually, for periods of less than one year, it should report cumulative returns (not annualized); this would have required putting conditions in the spreadsheet formulas, and I didn't get do it yet.

I'll fix it.

I hope you don't, if you haven't already. I was just thinking out loud. It makes perfect sense as it is, with the explanation.

The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

I am in the range of many of you so no need to report mine, at least for liquid assets. The harder investment to assess is real estate. About 30% of our investable assets are in real estate (not a REIT). Based on local market conditions, I believe that asset is up 10-15% (it is a very hot RE market here lately). If I take the lower number, our total investment package is up 5%.

longinvest wrote:For laziness reasons, the spreadsheet currently computes an annualized investor return, regardless of history length, even when history length is 11 months or less. Usually, for periods of less than one year, it should report cumulative returns (not annualized); this would have required putting conditions in the spreadsheet formulas, and I didn't get do it yet.

I'll fix it.

I hope you don't, if you haven't already. I was just thinking out loud. It makes perfect sense as it is, with the explanation.

<OFF TOPIC>

It was already my intention to work on the spreadsheet, so I also took the opportunity to work on this issue. If you'd like to test the new version and provide some very needed feedback, please read: viewtopic.php?f=10&t=150025&start=100#p2546871 (and provide your feedback, if any, on that thread).

pennstater2005 wrote:
For me, on the "my home" page you can see the personal performance graph. Underneath it, it says "performance details". I just clicked on that and then onto "investment prices and returns" and there are all the returns of my fund(s) including: YTD and 1,3,5 and 10 year returns.

Those are the returns for the individual funds, that's not the return of your own portfolio.

You have to show all holdings with documented transactions if you are going to claim those mighty returns. Otherwise, it looks like Beardstown Ladies math. I'm joking but not really!

That's funny. I may be able to find one of my holdings that's up 9.5% or more YTD (but I'm not going to bother looking, because if I do, it's a very small percentage of my portfolio, so I don't really care), and then I could share the transactions, and tell you that it's all of my holdings. Or I could share phony transactions (what form would we accept that could not have been faked?).

But yes, anyone claiming outlier performance like this is not holding any kind of Boglehead portfolio, and should share with us. I assume we could find any number of individual stocks up 10% or more YTD.

Now at 2.14% YTD. This is total return on entire 7 figure portfolio.
I have significant holding in EMs and Total international. But also a big chunk in Stable value to smooth things up.

As of today, VWO is my only holding with negative total return YTD -0.42%.
But my VEMAX stands at +1.04% YTD.
I did not buy any shares this year of either one except automatic dividend reinvestments.
The reinvestments happened on different dates, though, and different discount/premium to NAV for the ETF shares.
Somehow the ETF version of EM has done much worse.

I think this is exhaustive proof that Jack Bogle is right about mutual funds being better than ETFs